Oil prices rebounded from early morning losses to end higher in a volatile session with most market analysts attributing the rally to traders focusing on the details of the latest US petroleum output and supply reports.
Light sweet crude for October delivery added 84 cents or 19% to end at $46.55 a barrel on the New York Mercantile Exchange.
The US benchmark had earlier after the release of the production data touched an intraday low of $43.25 a barrel.
Brent Futures, the global benchmark, ended 94 cents or 1.9% higher at $50,50 a barrel on the London based ICE Futures Exchange.
The market strongly sold off immediately after inventory data from last week showed an unexpectedly big build in crude inventories in the US.
Buyers however jumped back after the prices had touched their intraday low rallying to end higher in the afternoon session.
Data from the government backed Energy Information Administration showed that crude stockpiles grew by more than 4.7 million barrels for the week ending 29th August, much higher than the 100,000 barrels consensus estimate of analysts polled by the Wall Street Journal.
Gasoline inventories fell less than expected , by 271, 000 barrels, compared to the 1.5 million draw consensus estimate of analysts polled by Reuters.
However, the report also showed that inventories at Cushing, Okla., the delivery and storage points of the active Nymex contract, fell by 388,000 barrels to 57.3 million barrels.
“While there is some seasonality to crude beginning to build at this time of the year, a four-plus-million-barrel build is bearish and larger than normal,” Scott Shelton, commodities specialist with ICAP in Durham, North Carolina, told Reuters.
The rally was however caped by reports that the US President Barrack Obama had sustained the adequate number of senate votes to veto any congressional resolution opposing the nuclear agreement between Iran and the world powers.
To contact the reporter of the story: Samuel Rae at firstname.lastname@example.org